home_based_realtors.htm

Home-Based Realtors are a unique group of entrepreneurs who have taken all of the benefits of being a realtor and removed the "Agency Factor," allowing them to grow and expand in ways that they may not be able to do otherwise. By becoming a home-based realtor, the individual can realize greater benefits both personally and potentially with profit margins. With proper self-marketing, and the lack of "overhead" associated with organized agencies, the home-based realtor can position themselves for growth opportunities that have been left uncovered by being a part of an agency. The home-based realtor essentially does the same things as a realtor associated with a "brand-name" agency, providing a conduit between home buyers and sellers to maximize the benefits for all parties involved.

Keep in mind, however, that some individuals may find a happier environment by working with an agency affiliation. This can provide more structure, guidance, camaraderie, and the credibility of being associated with an established group. Access to the multiple listing services may be provided for free or at a reduced cost for those realtors within an agency. The purpose of this "spotlight" is to let you know that this profession is certainly one to be considered by home-based entrepreneurs looking for a business.

Becoming a Home-Based Realtor involves far more than many home business opportunities because of the requirements that states have regarding licensing, rules governing how long one must operate with a broker, and continuing education and understanding of applicable federal, state, and local laws. In this article we cover some of the education needs, skill sets required to be successful in this industry, resources for existing and future realtors, as well as categorized information from a variety of resources.

Income for a Home-Based Realtor comes primarily from commissions earned on the sale of homes or other real estate that they have listed and/or sold. A typical fee would be about six percent of the purchase price, though fee sharing is often required when selling a property listed by another realtor. Occasionally, realtors earn consulting fees for rendering real estate advice or information requested by a client who is not yet ready to list their property.

Requirements

Successful Home-Based Realtors possess a set of skills that are common with most entrepreneurs. However, development of these skills needs to be well advanced to create potential success in the area of being a home-based realtor. Many of the "common skills" that are needed: superior communication, negotiation, organization, discipline, consistency, and clarity. In the communication department, advanced training/schooling is not necessary but well advised for the home-based realtor, especially in modalities, which may involve some psychology training to a certain extent to truly master the "art of communication" in this demanding work environment. Clarity is best found through continuing education and keeping up to date on all laws pertaining to where you are licensed, staying abreast of changes in the law and being proactive in working with your state and local government when changes are being proposed.

Discipline and consistency are common traits of any successful entrepreneur. Discipline simply means that the Home-Based Realtor completes actions and development in an organized way. Consistency contributes to and goes "hand-in-hand" with discipline. Consistency is measured in a way of quality and quantity of actions. Being consistent requires optimum energy and the avoidance of traps such as feeling overwhelmed, procrastinating, and other patterns that can sink any entrepreneur, but can cause significant financial loss for the home-based realtor. An effective realtor must have a disciplined follow-up system and the determination to answer all calls, provide information requested, and be willing to go the extra mile for a client. Negotiation and organizational skills are dependent on the individual, and often both of these qualities can be augmented and enhanced by education available through colleges, conferences, and professional associations.

Education/Licenses/Certifications

The education requirements for a realtor will vary from state to state, so it is important to check out the resources at the end of this article for more information on the requirements in your location and where you desire to operate. Most states require at least 90 hours or 6 semester units of instruction in Real Estate Principles, Practices and Law. Additional education relating directly to the laws where you are located or will operate will be required, and you will need to check your state requirements when considering the time and financial investments that may be necessary. For example, in Nevada, the requirements are the completion of the Real Estate Principles, Practices and Law, as well as a "minimum of 18 hours of Nevada Law…" which consists of specific state statutes regarding Real Estate. In a majority of the states, all education must be from a state-accredited provider, and these accreditations are determined by the state's Real Estate Board or Commission.

Additionally, passage of state and national exams are needed and proof is required when actually applying for a license in the place of operation. In most cases, the privileges gained from passing the national examination can be "transferred" to another state if the proper documentation is held. Usually these exams must all be completed within one year of the application for licensing in the state of operation. Just receiving the license after passing the national and state exams is not quite enough for operation independently.

Most states will allow the license to be issued, however the licensee is not allowed to conduct licensed real estate activity unless they are in the employ of a licensed broker. The time of being employed by a broker first averages around 2 years. After this time frame has been completed, full time as a licensed agent under a broker, the agent can then apply for and obtain a broker's license. This provides the opportunity to become truly independent as a home-based realtor entrepreneur.

Start Up Cost Estimates

Because of the educational aspect of becoming a home-based realtor, as well as varying state requirements and licensing costs, the start-up costs of this business vary widely across the spectrum. The cost factors to be considered are related to education, exams, finding a broker to work and deal with, and the subsequent cost of obtaining a broker's license. Other business start-up costs that need to be considered are:

· Continuing education for development of skill sets and being informed and up-to-date on current laws, regulations, and practices. Continuing education resources online from the National Association of Realtors® and membership in trade organizations such as the National Association of Realtors® are available and strongly advised for maximizing success potential in this diverse field. This may also include the cost of education in another state if the realtor plans to operate in more than one location or moves. Operation in more than one state is not necessarily beneficial unless the realtor's location is near cross-border markets. (An example of that would be someone living in the La Crosse, Wisconsin area who may want to capitalize on Real Estate properties across the Mississippi in La Crescent, Minnesota.)

· Advertising, business cards and supplies as the entrepreneur sees fit or finds recommendations from trade associations and others that are in the same field. Some entrepreneurs may choose a lower-profile advertising technique such as cold-calling or hanging brochures on doors in neighborhoods. The level and type of advertising will affect the initial financial output substantially. A sound business plan for all expenses should be written and in practice to maximize results and minimize "surprise" costs by having them outlined in advance with the plan.

· Potential outsourcing costs related to advertising, assistance from a brokered agency, and employees. This will vary depending on the entrepreneur's specific business plan, goals, and financial resources available at start-up.

· Memberships in trade organizations such as the Better Business Bureau, Chamber of Commerce, and the most potentially beneficial, the National Association of Realtors®.

· Insurance protection such as E&O (Errors and Omissions) Insurance if you work for a broker. If you have achieved broker licensure, this insurance may still be beneficial.

Professional Organizations

The home-based realtor will want to strongly consider memberships in professional organizations relating to their field, as well as organizations that are beneficial for all entrepreneurs. Organizations such as the Better Business Bureau can lend credence to the business from the beginning. Chamber of Commerce membership brings with it many advantages and can help create opportunities for the realtor to connect with potential business partners, advertisers, agencies, and home buyers and sellers. Most important among organizations from the research on this article was found to be membership with the National Association of Realtors®. Membership with the NAR provides many educational, networking, support, lobbying, and other programs and resources that will be important to the home-based entrepreneur. In addition, membership in the NAR provides the opportunity to display the widely recognized REALTOR® symbol. Member savings on tools and informational products, as well as education are another common benefit. See the National Association of Realtors® Website for further information on membership costs and benefits.

Income Potential

As with any business, the income potential relies heavily on the motivation and work ethic of the entrepreneur. Investment in self-growth, strong discipline and consistency will provide the opportunities for greater income potential. The number of hours worked (which is up to the entrepreneur, and can vary anywhere from 20-60 hours a week) will also help determine the income potentials for the home-based entrepreneur. In researching this topic and discussions with one home-based entrepreneur, it is summed up as follows:
"As with all businesses, it is your business and you get out of it what you put in. It really depends on how much money and work you put into it. If you do the cold calling and door knocking it is conceivable to make upwards of $150,000 per year."

Resources and Sources

Arello (The Association of Real Estate License Law Officials, visit site for information on State
Licensing). http://www.arello.org/

Continuing Education (CE) Requirements by State:
(Contains links to State Real Estate Commission Websites where available. As advised by the National Association of Realtors®, visit the corresponding states' Web link for the latest information on CE Requirements for that state.)

Council of Residential Specialists. http://www.crs.com/

Dearborn Real Estate Education. http://www.dearborn.com/recampus/

Landi, Frank J. Home Based Realtor. Owner, Eagle's Nest Homes. Realtor®, Prudential
Americana Realty, Las Vegas, Nevada. sfi1@cox.net

Legal Field Guides for Realtors.
http://www.realtor.org/vlibrary.nsf/pages/RefShelf?OpenDocument#legal

The National Association of Realtors®. http://www.realtor.org

The National Association of Realtors® Education Course Matrix.
http://www.realtor.org/edmatrix.nsf?OpenDatabase

The Real Estate Educators Association. http://www.reea.org/

Other Professional Organizations Mentioned:

Better Business Bureau. http://www.bbb.org/

U.S. Chamber of Commerce. http://www.uschamber.com/default

Daniel L. Dashnier is a home-based entrepreneur, freelance writer, and owner of Dashnier Enterprises, offering technical writing services and cooperative marketing tools in Madison, Wisconsin (GreatestNetworker@charter.net). He is currently a staff writer for IAHBE.